Section 125 Cafeteria Plan

The Section 125 Cafeteria Plan calculator will help you to figure out how setting up Flexible Spending Accounts through your employer can help you pay less in taxes and increase your net take home pay. This calculator can also help you to see how making changes to your existing deductions can affect your tax obligations and your take home pay. This calculator is updated to use the new withholding schedules each year.

By changing any value in the following form fields, calculated values are immediately provided for displayed output values. Click the view report button to see all of your results.

Available income is $0.00 more with FSA.

*This entry is Required. indicates required.

Current paycheck:

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Year to date income:*This entry is Required.Enter an amount between $0 and $1,000,000

Pay period:*This entry is Required.

Filing status:*This entry is Required.

Number of allowances:*This entry is Required.Enter an amount between 0 and 99

Gross pay:*This entry is Required.Enter an amount between $1 and $1,000,000

401(k)/403(b) plan withholding:*This entry is Required.Enter an amount between 0% and 80%

State & local taxes:*This entry is Required.Enter an amount between 0% and 20%

FSA expenses per period:

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Total $0.00

Medical FSA:*This entry is Required.Enter an amount between $0 and $1,000,000

Dependent care FSA:*This entry is Required.Enter an amount between $0 and $1,000,000

Health insurance premium FSA:*This entry is Required.Enter an amount between $0 and $1,000,000

Adoption assistance FSA:*This entry is Required.Enter an amount between $0 and $1,000,000

With "Flexible Spending Account": $766.27 Pie Chart: Please view the report to see detailed calculation results in tabular form.

With "Flexible Spending Account": $766.27

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Definitions

Pay period

This is how often you are paid. Your selections are: Weekly (52 paychecks per year), Every other week (26 paychecks per year), Twice a month (24 paychecks per year), Monthly (12 paychecks per year), and Annually (one paycheck per year).

Gross pay

This is your gross pay, before any deductions, for the pay period. Please enter a dollar amount from $1 to $1,000,000.

Filing status

This is your income tax filing status. The choices are "Single" and "Married." Choose "Married" if you are married or file as "Head of household." Choose "Single" if you file your taxes as a single person or if you are married but file separately.

Number of allowances

When your Federal income tax withholding is calculated, you are allowed to claim allowances to reduce the amount of the Federal income tax withholding. The number of allowances you should claim depends largely on the number of dependents you have and your itemized deductions. This calculator allows from 0 to 99 allowances.

401(k)/403(b) plan withholding

This is the percent of your gross income you put into a taxable deferred retirement account such as a 401(k) or 403(b). While increasing your retirement account savings does lower your take home pay, it also lowers your Federal income tax withholding. The impact on your paycheck might be less than you think. While your plan may not have a deferral percentage limit, this calculator limits deferrals to 80% to account for FICA (Social Security and Medicare) taxes. Please note that your 401(k) or 403(b) plan contributions may be limited to less than 80% of your income. Check with your plan administrator for details. For 2019, the maximum contribution for this type of plan is $19,000 per year for individuals under 50 and $25,000 for individuals 50 or older.

State and local taxes

This is the percentage that will be deducted for state and local taxes. For 2019, we take your gross pay, minus $4,200 per allowance, times this percentage to estimate your state and local taxes. Please note, this calculator can only estimate your state and local tax withholding. The tax rate displayed is an assumption that may or may not be relevant to your situation.

Flexible Spending Account (FSA) Contribution

The amount that will be deducted from your paycheck each pay period for your FSA participation. All amounts are considered pre-tax deductions from your paycheck when you participate in your company's FSA plan. We consider these expenses to be ordinary after-tax expenses if you do not participate.

Medical FSA

The amount per period that you wish to contribute to a Flexible Spending Account (FSA) for medical and dental expenses. All amounts you enter here are considered pre-tax deductions from your paycheck if you participate in your company's medical FSA. We consider these expenses to be ordinary after-tax expenses if you do not participate. In 2019, the maximum annual contribution to a medical FSA is $2700 per year. This amount is indexed for inflation for future years.

Dependent care FSA

The amount per period that you wish to contribute to Flexible Spending Account (FSA) for dependent expenses. All amounts you enter here are considered pre-tax deductions from your paycheck if you participate in your company's dependent care FSA. We consider these expenses to be ordinary after-tax expenses if you do not participate. The maximum annual contribution is $5000 per household. If your spouse participates in dependent care FSA, the combined household limit is $5000.

Health insurance premium FSA

The amount per period that you wish to contribute to a Flexible Spending Account (FSA) for health insurance premiums. All amounts you enter here are considered pre-tax deductions from your paycheck if you participate in your company's medical FSA. We consider these expenses to be ordinary after-tax expenses if you do not participate. The maximum annual contribution of $2700 per year does not apply to health insurance premiums.

Adoption assistance FSA

The amount per period that you wish to contribute to a Flexible Spending Account (FSA) for adoption assistance. All amounts you enter here are considered pre-tax deductions from your paycheck if you participate in your company's adoption FSA. We consider these expenses to be ordinary after-tax expenses if you do not participate. Contribution limits for an adoption assistance are set by your employer's FSA plan. Unlike other FSA contributions, adoption assistance FSA contributions do not reduce your Social Security or Medicare taxes.

Year-to-date earnings

Your current year gross earnings that were subject to FICA taxes (Social Security tax and Medicare tax). This total should not include the current payroll period or any income from other sources or employers. We use this amount to determine if you are required to have Social Security tax or additional Medicare tax withheld for the current payroll period. Typically, this is your gross earnings minus employer paid health insurance and any Flexible Spending Account (FSA) contributions. In 2019, year-to-date earnings is not required or used for incomes under $132,900 per year, or if your current year-to-date earnings plus your current payroll does not exceed $132,900.

Social Security tax

For 2019, Social Security tax is calculated as your gross earnings times 6.2%. For 2019, incomes over $132,900 that have already had the maximum Social Security tax of $8,239.80 withheld will not have additional withholding. Please note that if you have other wages or employers this calculator does not make any assumptions as to the total Social Security tax withheld for the current year other than the actual inputs for this calculator. This tax is also referred to as the Federal Insurance Contributions Act Old Age Survivors and Disability Insurance (FICA OASDI).

Medicare tax

Medicare tax is calculated as your gross earnings times 1.45%. Unlike the Social Security tax, there is no annual limit to the Medicare tax. Starting in 2013, an additional Medicare tax of 0.9% is withheld on all gross earnings paid in excess of $200,000 in a calendar year. If you enter an amount for the year-to-date gross earnings, this additional Medicare tax will be calculated based on the current period's gross earnings that exceed the annual $200,000 threshold. If no year-to-date amount is entered, any additional Medicare tax withholding will be calculated only for any gross earnings in excess of $200,000 for the current payroll period. If year-to-date wages prior to the current payroll period have exceeded $200,000, the year-to-date wages must be entered to calculate an accurate additional Medicare tax.

Federal tax withholding calculations

Federal income tax withholding is calculated by:

Multiplying taxable gross wages by the number of pay periods per year to compute your annual wage.
Subtracting the value of Withholding Allowances claimed (for 2019, this is $4,200 multiplied by Withholding Allowances claimed on the employee's W-4: Employee's Withholding Allowance Certificate).
Determining your annual tax by using the tables below (single and married rates, respectively).
Dividing the amount of tax by the number of pay periods per year to arrive at the amount of Federal tax withholding to be deducted per pay period.

Single Withholding Rates 2019^*
Annual taxable income between these amounts	Annual withholding	Withhold additional % of income over this amount
^*Source: http://www.irs.gov Publication 15 Income Tax Withholding Tables for 2019
$0 - $3,800	$0.00
$3,800 - $13,500	$0.00	plus 10% of income over $3,800
$13,500 - $43,275	$970.00	plus 12% of income over $13,500
$43,275 - $88,000	$4,543.00	plus 22% of income over $43,275
$88,000 - $164,525	$14,382.50	plus 24% of income over $88,000
$164,525 - $207,900	$32,748.50	plus 32% of income over $164,525
$207,900 - $514,100	$46,628.50	plus 35% of income over $207,900
$514,100 - (no limit)	$153,798.50	plus 37% of income over $514,100

Married Withholding Rates 2019^*
Annual taxable income between these amounts	Annual withholding	Withhold additional % of income over this amount
^*Source: http://www.irs.gov Publication 15 Income Tax Withholding Tables for 2019
$0 - $11,800	$0.00
$11,800 - $31,200	$0.00	plus 10% of income over $11,800
$31,200 - $90,750	$1,940.00	plus 12% of income over $31,200
$90,750 - $180,200	$9,086.00	plus 22% of income over $90,750
$180,200 - $333,250	$28,765.00	plus 24% of income over $180,200
$333,250 - $420,000	$65,497.00	plus 32% of income over $333,250
$420,000 - $624,150	$93,257.00	plus 35% of income over $420,000
$624,150 - (no limit)	$164,709.50	plus 37% of income over $624,150

Section 125 Cafeteria Plan Overview

Many employers offer their employees the opportunity to participate in Flexible Spending Accounts, technically known as Section 125 Cafeteria Plans. This accounts allow workers to set aside some of their pre-tax earnings to pay for things like medical expenses, child care, health insurance premiums and costs related to adopting a child.

Because these things aren't generally tax-deductible, setting up a Flexible Spending Account (FSA) gives workers an indirect way to deduct those costs from their earnings and reduce their tax bill. Funds placed in an FSA, up to certain allowed limits, are counted as pre-tax deductions and reduce your taxable income.

You can choose which types of accounts you wish to use from among the ones available, which is why they are called "cafeteria plans."

Not everyone can use an FSA. They've only available to employees working for a business that offers a Section 125 Cafeteria Plan. They are not available to self-employed individuals, business owners or partners in a business (with the possible exception of certain limited partnerships).

You should plan carefully before setting up an FSA, because you want to be sure you use all the money you put in it every year. If you don't, you could lose it. The law allows you to roll over up to $500 in unused health care funds (not including insurance) to the following year, but anything above that reverts to your employer.

For example, let's say you put $2,500 month into your medical FSA, but only ran up $1,750 in allowable medical expenses by the end of the year. You could roll $500 into your account for the following year, but would lose $250 to your employer. With the tax savings, you might still come out ahead, but it's important to plan carefully.

Using the Section 125 Cafeteria Plan Calculator

Enter your information in the boxes indicated. If you have questions about any particular box, click on the description for more information, including updated maximum FSA contributions.

Note that your gross pay and your FSA expenses must be for the pay period you select as the second entry in the calculator. For example, if you select a "weekly" pay period, enter the amount withheld for your FSAs each week, not the total for the year.

For example, if you put $2,400 into your medical care FSA each year and are paid on a monthly basis, you would enter $200 as your FSA medical care expenses, because that's the amount taken out of each paycheck.

Choosing the "annual" option can simplify matters, even if you're paid on a weekly or monthly basis, as you can simply enter the total withholdings you want to make for the year for each FSA. If you do that, however, enter "0" for the amount you have been paid to date or the calculator will add that amount onto your annual earnings, as it will assume you receive those at year's end.

If you choose the "annual" pay period option, the calculator assumes you receive all your pay at the end of the year.

Running the calculation will show you how much more available income (tax savings) you will have per pay period. Use the "View report" button to see a more detailed financial breakdown of revenues, costs and expenses for the year.

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